It might be the most nerve-wracking, anticipatory, hard-to-find-the-patience question of home buying for first timers:
“When do I finally get the keys to my new house?”
Usually, a buyer takes possession of a new home after closing. But exactly how that is defined differs transaction to transaction.
In some states, this occurs when the local government has the new title on file, which could be a few days after you’ve signed all the papers. And other contingencies can be built into the negotiating process.
Get the Keys Before Closing
New buyers might want to move in before closing for a variety of reasons—because they sold their old place, because they want to get a jump on fixing up the new house, or because in a buyer’s market, they may ask themselves, “Why not?”
But moving in early presents a host of issues. First, there’s legal liability—what if the soon-to-be-owners do something to the house, or hurt themselves while in the new place? Who’s responsible for damage to property or person?
Then there’s the money angle—the old homeowners could ask for rent, since they still own the place, which the almost-owners might not be keen on paying.
And of course, there’s always the risk that for some reason the sale falls apart in the final hours, especially with all the various deals, parties and paperwork involved in home buying. And what if the new occupants refuse to move?
This type of possession can work, especially if the seller has already vacated the property. Just make sure to get any agreement in writing, in case anything sours.
Get the Keys At or After Closing
This is more typical. But exactly when closing occurs varies. It’s not always at the signing of the papers, no matter how exhaustive that process.
As mentioned above, you may have to wait until the county officially records the new title. Your REALTOR® should know local laws and be able to guide you through this process. This way, there’s a clear delineation between the previous owner and their responsibility and liability for the home, and the new owner’s.
The biggest surprise to many homeowners can be how long it takes the county to record the title. It could be a few days after signing—so while you just handed over large sums and signed hours worth of paperwork, the keys may not officially be yours for a few more days.
Again, talk to your REALTOR® about your local rules.
If you’re selling, organizing a move can be a challenge. Not only do you need to pack, but booking movers during a busy summer season or around a holiday can prove tough.
And if you’re selling your current home and buying a new one in quick succession, you’ve got a lot to coordinate. Some buyers will agree to rent-back agreements, where they will rent the home back to the seller for a few days after closing. Divide the mortgage and costs by 30 (or 31), and that’s usually the amount you’ll pay per day to rent the home back.
Buyers don’t have to do this, of course, and they may have their own reasons for wanting to take the keys ASAP. They might have someone moving in to their old place. Maybe they are moving from out-of-town straight to the new house, so a rent-back means they’d have to find their own shelter for a few days.
Or maybe they just want to get a jump on painting and shampooing the carpet—their right as the owners. So while renting can be an option, it’s not always possible.
And the sellers can rent to the buyers as well. If the buyers want an early possession, a rental agreement is certainly in the rights of the soon-to-be-former homeowners, and often happens on similar terms as rental agreements after closing, at daily rates based on monthly mortgage costs.
Most loans close in a timely manner, but be prepared for closing delays.
First, there’s the radical delay—don’t expect your South Florida closing date to hold if, say, there’s a hurricane churning up the coast. That’s an unlikely scenario but not an unheard-of one.
More typically, the closing delay stems from more benign paperwork and human error. An active market when a high amount of home transfer activity translates into higher amounts of paperwork for banks and county deed recorders’ offices.
From the loan standpoint, delays occur when the bank requires some type of loan condition, such as additional credit references, additional paperwork to show income, or a higher escrow amount. A mortgage underwriter, upon reviewing the particulars of the closing, may want more information.
Some paperwork glitch might delay money transfers until late in the day, and then the funds won’t be available until the next morning, notes REALTOR® Jonathan Osman in his Charlotte, NC, area blog.
His tips: Always schedule closings for mornings, never close on Fridays, and plan movers for the day after you plan to get the keys. That way you leave yourself some wiggle room.
For all, patience rules. Many veteran homebuyers have last-minute home buying paperwork frustrations to share. But ultimately, their trials ended with that most prized possession—getting the keys.